\n<\/p>\n
Commentary<\/em><\/p>\n Well, here we go again: For the next few months we\u2019ll be witnessing what I call \u201cthe debt ceiling dance<\/a>\u201d\u2014the same old back-and-forth rhetorical sallies (GOP: \u201cWe need to cut some spending\u201d; Democrats: \u201cRaise the limit unconditionally\u201d).<\/p>\n The ritual of the debt-ceiling dance is well known because we\u2019ve been through it many times before. There may be some modest compromises\u2014such as flimsy, soon-to-be-broken promises to limit spending increases. Ultimately, though, Congress will authorize the federal debt to be increased from its current statutory limit of $31.4 trillion. Uncle Sam has to keep paying his bills or the entire financial system will seize up, inflicting incalculable economic damage.<\/p>\n The decades-long contest over the debt ceiling<\/a> has been between two conflicting principles, one moral, the other political. For most of American history, both parties accepted the moral tenet that it was unjust, repulsive, and abusive to spend money on ourselves today and expect our children to pick up the tab. Thomas Jefferson referred to it as \u201cswindling futurity on a large scale<\/a>.\u201d<\/p>\n For more than a century after our republic\u2019s founding, presidents and congresses generally shunned budget deficits except in times of war. Eventually, though, the moral taboo about deficit spending gave way to the competing dynamic of political expediency. Starting with Presidents Herbert Hoover and Franklin Roosevelt in the 1930s (and egged on by that exceedingly clever but spectacularly wrong political economist John Maynard Keynes<\/a>), deficit spending in the name of boosting the economy became a new political orthodoxy.<\/p>\n From the end of World War II until 1968, the federal budget<\/a> either had a small surplus or small deficit. Then, Lyndon Johnson\u2019s \u201cguns and butter\u201d policies (simultaneously waging military operations in Vietnam while launching an expensive war on poverty at home) inaugurated an era of chronic deficits.<\/p>\n The first time the accumulated national debt exceeded $1 trillion was during Ronald Reagan\u2019s first term. Reagan made a deal with Democratic Speaker of the House Tip O\u2019Neill. In exchange for funding the military buildup that helped to precipitate the implosion of the Soviet Union, domestic spending was increased, too (more \u201cguns and butter\u201d).<\/p>\n I recall writing an article expressing my shock and dismay when the federal deficit<\/a> reached $4 trillion at the end of George H.W. Bush\u2019s presidency in 1992. The trend toward ever-larger federal deficits and debt paused during Bill Clinton\u2019s second term, when several annual budgets were in surplus thanks to Clinton\u2019s pragmatism and the inspired vision and leadership of Republican Speaker Newt Gingrich. The 1990s featured a fiscal \u201cperfect storm\u201d to wash away red ink: The end of the Cold War led to defense spending cuts; the welfare reform of 1996 slashed welfare expenditures and increased the number of taxpaying workers; the Roth IRA legislation of 1997 induced millions of Americans to pay taxes on their private retirement funds up front; the \u201cGreenspan put\u201d-fueled stock market bubble gave Uncle Sam a windfall of capital gains revenue. Sadly, except for capital gains revenue, those were all one-off phenomena. Then 9\/11 happened, and we\u2019ve been swimming in red ink ever since.<\/p>\n Under George Bush, the national debt<\/a> practically doubled from ~$6 trillion to ~$12 trillion. Under Barack Obama, it rose another ~$8 trillion. In the six years of Presidents Donald Trump and Joe Biden, it has risen from ~$20 trillion to the current $31.4 trillion\u2014over 9 percent per year. Considering that the U.S. GDP has been struggling to increase 3 percent per year over the last decade, we\u2019re on an unsustainable fiscal path.<\/p>\n How did we get to this point? Major reasons include:<\/p>\n (1) The creation of entitlements. More than half of federal spending\u2014Social Security, Medicare, Medicaid, welfare\u2014consists of entitlements. Spending increases for these programs are automatic, requiring no annual appropriations by Congress. Example: Social Security payments, which were ~$1.2 trillion in 2022, will increase by 8.7 percent (annual cost of living adjustment) in 2023 to ~$1.3 trillion.<\/p>\n